[Event]: The company released its 2023 annual report, achieving revenue of 2,068 billion yuan, -4.87% year-on-year, and net profit of 42.8 million yuan, or -79.26% year-on-year. The company announced 2024Q1 results, achieving revenue of 542 million yuan, +27.45%, and +2.61% month-on-month; net profit to mother of 30.75 million yuan, +151.55% year-on-year, reversing losses from month to month.

Performance bottomed out and rebounded: In 2023, the company achieved a total sales volume of 25.36 million square meters of polarizer, +10.94% over the same period last year.

As the company's small to medium size products were affected by poor downstream and terminal demand, and the price competition for 32-inch TV products with large supply volumes was fierce, the unit sales price declined by a certain margin. In addition, the company accrued asset impairment losses of RMB 32.15 million in 2023Q4 (RMB 23.4 million in 2022). At the same time, due to sales repayments from downstream customers falling short of expectations, the company calculated a credit impairment loss of 26.67 million yuan in 2023Q4 (loss of 32.56 million yuan in 2023 and profit of 11.14 million yuan in 2022). As a result, the company achieved revenue of 529 million yuan in a single quarter of 2023Q4, +3.34% year over month, and -6.74% month on month; net profit to mother was 15.58 million yuan, -181.00% year over year, and -145.24% month on month. The company's 2024Q1 performance bottomed out and achieved good performance.

The industry is recovering, and the company is expected to benefit: looking forward to the later stages, the demand side will be affected by sporting event stocking demand and high price increases expectations. End customer orders will be released early, demand in the TV industry will pick up, downstream panel makers will be boosted by order releases, and the operating rate will increase rapidly. Meanwhile, the price of TV products has been rising across the board since February, and the increase in March showed an expanding trend; the upward trend in IT product prices has begun to show initial signs, and the company is expected to benefit as an upstream panel supplier.

Investment advice: We expect the company to achieve operating income of 28.01/34.17/4.112 billion yuan and net profit to mother of 1.76/2.30/ 365 million yuan in 2024-2026. The corresponding PE was 23.80/18.20/11.45 times, respectively, maintaining the “gain” rating.

Risk warning: Production capacity release falls short of expectations; consumer electronics demand falls short of expectations; new product development falls short of expectations.